Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

CMS is requesting public comments on how to define service areas for Medicare Quality Improvement Organizations (QIOs). Specifically, CMS wants input on four potential options CMS may use to divide work among a varying number of QIO contractors into service areas that are focused on quality-improvement-related work only. CMS is also seeking “fresh new ideas” regarding other options for organizing QIO contractors. According to CMS, this review is triggered by the evolution of the field of health care quality improvement and changes in health delivery systems. Comments will be accepted until May 31, 2013.

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CMS has posted data on hospital charges associated with the 100 most common Medicare inpatient stays. In a fact sheet announcing the availability of the data, CMS highlighted the “significant variation in charges from hospital to hospital -- including those within the same community -- for inpatient services that may be provided in connection with a given inpatient stay.” For instance, a CMS fact sheet notes that the range in average inpatient charges for services associated with joint replacement (MS-DRG 470) range from $5,300 to $223,000.
 

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CMS has issued guidance to state survey agencies explaining adjustments CMS is making to survey and certification operations to "accommodate sequestration with as little impact on the public as possible." The guidance discusses revisions in the frequency and timelines for various surveys and other survey changes in light of a 5% reduction to the FY 2013 survey and certification Medicare budget. CMS also issued a May 1, 2013 memo to Part C and D plans on sequestration, covering rules regarding reducing payments to contracted and non-contract providers, beneficiary liability under sequestration, coverage gap discount program payments, Part D risk corridor reconciliation, and Electronic Health Records (EHR) Incentive Program payments, among other topics. In a related development, President Obama has signed the sequestration order for FY 2014, as required by law, although the Obama Administration's proposed FY 2014 budget, if adopted, would replace sequestration.

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On May 9, 2013, CMS announced a 60-day comment period on gapfill payment amounts for new molecular pathology codes under the Clinical Laboratory Fee Schedule (CLFS) for 2013 and 2014. The data includes Medicare Administrative Carrier (MAC) payment amounts and the MACs’ rationale for certain tests. CMS invites the public to submit specific cost, test methodology, and any other information relevant to the pricing review. CMS will post the final gapfill pricing decisions in September 2013, which will apply to payments for these test codes in 2013 and 2014. The public will have an additional 30 days to request reconsideration of decisions in the September file.

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CMS is now accepting quality measure suggestions for potential inclusion in the Physician Quality Reporting System (PQRS) in future years. In particular, CMS is seeking outcome-based quality measures addressing measure and performance gaps, including clinical outcomes, patient-reported outcomes, care coordination, safety, appropriateness, efficiency, and patient experience and engagement. Measure suggestions will be accepted until July 1, 2013. In order to be considered, each measure must include all required supporting documentation.

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The ACA’s controversial Independent Payment Advisory Board (IPAB) is charged with submitting detailed proposals to Congress and the President to reduce Medicare per-capita spending if projected spending growth exceeds a specified target based initially on inflation and then growth in the economy. IPAB’s proposals will go into effect automatically unless Congress enacts alternative legislation to achieve the required savings (with certain exceptions). The ACA authorizes the IPAB’s first recommendations to be submitted by January 2014 for implementation in 2015 if the Medicare per capita target growth rate is exceeded. The CMS Office of the Actuary has just determined, however, that the Medicare spending target will not be triggered for 2015, and as a result IPAB savings proposals will not be needed for that year. Specifically, in an April 30, 2013 memo, the Actuary explained that because the projected 5-year Medicare per capita growth rate (1.15%) for the period of 2011 to 2015 does not exceed the Medicare per capita target growth rate (3.03%), there is no applicable savings target for 2015. Note that to date, no members have been appointed to the IPAB, and there have been repeated legislative attempts to repeal the IPAB provision (although the Obama Administration’s proposed FY 2014 budget would strengthen the IPAB by reducing the target rate of Medicare cost growth that triggers IPAB recommendations).

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CMS has posted the draft February 2013 FULs and Draft February 2013 Three-Month Rolling Average FULs. CMS will continue to accept comments on the draft average manufacturer price-based FULs and the draft three-month rolling average FULs, along with the methodologies used to calculate them.

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CMS has released a list of teaching hospital “covered recipients” to which payments and other transfers of value must be reported by applicable drug and device manufacturers under the ACA Physician Payment Sunshine Act Final Rule, as discussed in a posting on our Life Sciences Legal Update blog. The posting also discusses industry efforts to obtain CMS clarification on various outstanding questions related to the reporting requirements. In addition, CMS has announced a May 22 National Provider Call on the Sunshine Act reporting requirements, directed to physicians and teaching hospitals and covering the Final Rule, key dates, the role of covered recipients, and resources available to covered recipients.

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On April 25, 2013, CMS announced that, due to technical issues, it is delaying implementation of the Phase 2 ordering and referring deniial editsntil further notice. By way of background, CMS plans to implement edits that will deny claims for Medicare Part B services (including the technical/non-interpretation component of imaging services, lab services, and durable medical equipment) and Part A home health agency services if the ordering/referring physician or other professional is not identified, is not in Medicare's enrollment records, or is not of a specialty type that may order/refer the service/item being billed. While CMS intended to require Medicare contractors to activate these edits effective May 1, 2013, concerns had been raised by physicians and suppliers that they could experience claims denials and delays based on discrepancies between the names of the ordering physician on the 1500 claim form and in Medicare’s enrollment records. CMS expects to announce a new implementation date in the near future.

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On April 9, 2013, CMS announced the names of 799 suppliers that have been awarded 3-year contracts under Round 2 of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program, along with the 18 suppliers that accepted contracts under the national mail order competition for diabetic testing supplies. Under competitive bidding, only suppliers that are winning bidders, meet licensing and other standards, and enter into a contract with CMS may furnish selected categories of DMEPOS to Medicare beneficiaries in competitive bidding areas (CBAs), with very limited exceptions. Winning bidders who sign contracts are paid based on the median of the winning suppliers’ bids in the CBA, rather than the DMEPOS fee schedule amount. Contracts under Round 2 and national mail-order contracts begin on July 1, 2013. As previously reported, Medicare reimbursement will be cut by an average of 45% for suppliers participating in Round 2, which covers eight product areas in 100 CBAs. Mail-order diabetic testing supplies contracts cover all 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa. Medicare reimbursement for diabetic testing supplies will fall 72% compared to current fee schedule amounts (the new prices will be applied in the retail setting as well under separate legislative authority). CMS notes that Round 2 contract suppliers have 2,988 locations to serve Medicare beneficiaries in the CBAs, and about 63% of these suppliers are “small suppliers,” with gross revenues of $3.5 million or less. CMS will now step up educational efforts aimed at suppliers, referral agents, and beneficiaries in preparation for the expansion of competitive bidding this summer.

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On April 1, 2013, CMS released the 2014 rate announcement and final call letter for Medicare Advantage (MA) and Part D prescription drug plans. Notably, under final rate announcement, CMS is forecasting that the final estimate of the combined effect of the Medicare Advantage (MA) growth percentage and the fee-for-service (FFS) growth percentage is 3.3%, compared to -2.2% in the advance call letter, which has the effect of increasing MA plan payment rates. This reversal is a result of CMS building into its spending forecast the assumption that Congress will once again override scheduled cuts in Medicare payments to physicians under the sustainable growth rate formula (thereby allowing MA plan payments to be compared to higher expected FFS spending levels). CMS also is phasing in the alignment of MA benchmarks with Medicare FFS costs and adjusting for diagnostic coding differences between MA plans and FFS providers, along with revising the risk adjustment model.

With regard to Part D, CMS notes that for the first time in the Part D program’s history, the costs of beneficiary coverage are falling, with the 2014 defined standard Part D prescription drug benefit having lower co-payments and deductible than in 2013. CMS also is adopting a number of policy changes for 2014, including requiring Part D plan retail and mail pharmacies to obtain patient consent to deliver a prescription, new or refill, prior to each delivery (CMS also encourages Part D plans to implement this consent requirement for the remainder of this year). While CMS had proposed requiring Part D sponsors to place beneficiary-level prior authorization requirements on certain categories of drugs which may be covered under the hospice or end stage renal disease (ESRD) benefits, so as to ensure that these drugs are appropriately payable under Part D before the prescriptions are filled, the final policy permits sponsors to use other approaches, such as pay-and-chase, to resolve payment responsibility in these situations.

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CMS is reminding eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) attesting to receive an incentive payment for either the Medicare or Medicaid Electronic Health Record (EHR) Incentive Program that they may be subject to a pre-payment or post-payment audit. CMS has provided a fact sheet on supporting documentation for providers selected for such audits.

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CMS has released a letter providing operational and technical guidance for issuers seeking to offer Qualified Health Plans (QHPs) on Federally-facilitated and State Partnership Exchanges. The letter addresses, among other things, the QHP certification process; QHP performance and oversight; enrollment and premium payment; and consumer support. There is also an appendix with additional guidance on Essential Health Benefit Prescription Drug Coverage, Actuarial Value, and Cost Sharing.

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CMS has unveiled its Medicare Chronic Conditions Dashboard – a tool designed to help researchers, health professionals, and policymakers find and analyze spending, demographic and other data regarding beneficiaries with multiple chronic conditions.  

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As previously reported, on March 1, 2013, President Obama issued a sequestration order (required by law) that triggers automatic cuts to most federal programs, including a 2% cut to Medicare payments to providers and health plans. The cuts generally apply to Medicare fee-for-service (FFS) claims with dates-of-service or dates-of-discharge on or after April 1, 2013. CMS has provided to its contractors a number of questions and answers on Medicare and sequestration that address, among other things, the use of claim adjustment reason code (CARC) 223 to report the sequestration reduction (Adjustment code for mandated Federal, State or local law/regulation that is not already covered by another code and is mandated before a new code can be created). CMS also confirms that sequestration modifies final FFS payments to providers, not fee schedules and pricers, and it provides examples of how claims are calculated after application of patient cost-sharing. For more information on how sequestration affects Medicare, see our previous blog reports.  

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As required by law, on March 1, 2013, President Obama issued a sequestration order triggering automatic cuts to a wide range of federal programs, including Medicare payments to providers and health plans. On March 8, 2013, CMS released its first guidance on sequestration, in the form of an “e-News” message to providers. CMS confirms that Medicare fee-for-service (FFS) claims with dates-of-service or dates-of-discharge on or after April 1, 2013 generally will incur a 2% reduction. Claims for DMEPOS supplies – including claims under the DMEPOS competitive bidding program – also will be reduced by 2%, if the date of service, or the start date for rental equipment or multi-day supplies, is on or after April 1, 2013. CMS notes that the sequestration adjustment will be applied to claims after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments. Moreover, while beneficiary deductible and coinsurance payments are not subject to sequestration, Medicare’s payment to beneficiaries for unassigned claims is subject to the 2% cut. CMS encourages Medicare providers and suppliers who bill claims on an unassigned basis to discuss with beneficiaries the impact sequestration will have on Medicare reimbursement. Additional details on how sequestration affects Medicare are provided in our recent client alert. 

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Effective May 1, 2013, Medicare contractors will activate edits that will deny claims for Medicare Part B (including imaging and lab services), DME, and Part A home health agency (HHA) services if the ordering/referring physician or other professional is not identified, is not in Medicare's enrollment records, or is not of a specialty type that may order/refer the service/item being billed. Concerns have been raised by physicians and suppliers that they could experience claims denials and delays after May 1 based on discrepancies between the names of the ordering physician on the 1500 claim form and in Medicare’s enrollment records. CMS is holding a March 20, 2013 National Provider Call to discuss these new requirements.

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In preparation for the October 1, 2014, ICD-10 code set implementation date, CMS has posted a variety of ICD-10 checklists and planning timelines for provider practices, hospitals, and payers.  CMS also has outlined suggested steps for ensuring a smooth transition to ICD-10 and preparing for potential cash-flow disruptions from claims processing delays. For instance, CMS encourages providers to process ICD-9 transactions before the October 1, 2014 deadline “to avoid facing a major backlog.”

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CMS is extending the 2013 Medicare participation enrollment period for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) until April 15, 2013. By way of background, a supplier that signs a participation agreement commits to accepting the Medicare Part B rate as payment in full for all beneficiaries. Changes in a supplier’s participation status can only be made during the annual open enrollment period. While CMS is extending the deadline because some suppliers apparently were not aware of a previous deadline extension to February 15, the new announcement gives suppliers another opportunity to examine their participation status in light of recent Medicare payment developments, including sequestration and upcoming Medicare cuts for retail diabetic testing supplies. Any change in election status will be effective January 1, 2013, but CMS will not reprocess claims already filed. 

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CMS has posted the April 2013 Medicare Part B ASP files.CMS observes that average drug prices in the market generally remain stable, with prices for the top Part B drugs decreasing by 0.5% from the first to second quarter of 2013. Note that unlike other recent quarterly updates, CMS does not provide an update on implementation of average-manufacturer price based price substitutions (CMS previously stated that it was delaying implementation due to “a variety of operational issues”).

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